AMHARA NATIONAL REGIONAL STATE BUREAU OF LABOUR AND SOCIAL AFFAIRS ETHIOPIA (Discussion Paper)

Resolving labour disputes through Bi-partite and Tri-partite mechanisms: A Case Study in the Construction Industry

By Mesfin Raji

May 2006 Bahirdar

[LABOUR DISPUTE: A CASE STUDY IN THE CONSTRUCTION INDUSTRY] May 18, 2006

1. Introduction Amhara region is one of the nine regional states established by the constitution of Federal Democratic Republic of Ethiopia. According to the data obtained from the Regional Bureau of Finance & Economic Development, the population of Amhara region is assumed to be reaching 19.12 million1 as of 2006. The GDP of the region in the year's 1995/96-2004/05 is composed of 61.7 percent from agriculture and its allies, 22.9 and 15.4 percent from industry and service sectors respectively. It grew annually on the average by 5.2% over those years. Next to agriculture, industry is the major sector in the economic structure of the region. Currently, in five business categories (Wholesale trades, retail trades, services, commercial agriculture and industries) there are about 57,030 establishments2 in the region. In addition, in the region, according to CSA sample survey 1994 E.C there are about 405,855 small and micro enterprises which can absorb the great majority of the urban poor i.e. about 385,612 man powers. All these indicators are becoming a pressing factor to design an efficient labor management system that can cope with the emerging, potential investments in the region. The Regional Bureau of Labour & Social Affairs (BoLSA) on the basis of its duties & responsibilities vested by the regional council facing this cumbersome so as to manage and modulate it with the federal labour laws governing principles. From the past five years onwards, there is a need that arouse to put the system into effect following the emergence of multinational companies (MNC) in the region, mainly in the Road Construction Sector like the J&P Dragados Joint Venture (Spanish origin) and different Chinese Road Construction Companies. The labour administration faced danger due to the incompatibility of work culture between the expatriates and the local workers. In doing so, the department of labour in BOLSA has tried to develop a guideline to handle and manage labour disputes based on the frame work of social

Development indicators, 2006, 4th edition No data was available on the size of man power

[LABOUR DISPUTE: A CASE STUDY IN THE CONSTRUCTION INDUSTRY] May 18, 2006 dialogue which is believed to be the best system in dealing with labour disputes in an environment where there is a culture mix or large size of vibrant labour force. 2. Description of the case study Before looking into the details of the case, it is better to know the labour dispute settlement practices in the region. It is very well known that the labour law of Ethiopia, Proclamation 377/03(as it is revised) has introduced all the six main instruments of labour dispute settlement mechanisms. To mention them: Collective bargaining (agreement) - Article 124-135 Conciliation - Article 141-142 Adjudication - Article 144-156 Arbitration - Article 143 Social dialogue (Tripartite ) - Article 170/2 &171 Persuasion (Strike & Lock-out) - Article 157-160 Out of the six menus, only the first three instruments are practically working in the region. Out of the 109 trade unions registered by the bureau, 61% are already bargained and established their collective agreements with their respective management. Based on the stipulation of the labour law, BoLSA has assigned one conciliator for each Zonal Branch Offices (a total of 10) to manage the emerging problems. There are also two permanent labour relation boards and additional one adhoc labour relation board established in the region. Even though persuasion is not recommended and used as only as the last resort in dispute settlement, it might be taken as safety valve to exercise the rights of the parties whenever the need arise. What remain is Arbitration & social dialogue. So it is important to expand the means as an alternative way of tackling problems easily. In this regard social dialogue is typically different from the other instruments in dealing with a specific work related problem by shifting from win-lose dispute solving attitude to dispute prevention attitude by making the opponents part of the solution. It is a Win-Win solution. That means it promote a participatory approach. As mentioned earlier the construction industry has great potential of absorbing

[LABOUR DISPUTE: A CASE STUDY IN THE CONSTRUCTION INDUSTRY] May 18, 2006 relatively large size of manpower. The topic that is going to be discussed is very challenging in dealing sometimes with frequent stalemate situations. 3. Where the case is taking place? The case was happened in Dragados J&P joint Venture Road Construction Company that deploy more than 2,500 labour force for the project engaged in the construction of a road that stretch about 190 km from Tarmaber to Combolcha, North-East of Ethiopia, on the main route of northern part of Ethiopia from the capital, Addis Abeba to Mekelle. The confrontation is between the management of the company and trade union and begun right at the outset of the trade union's has received its legal recognition as sole representative of the employees. For long period of time, they have tried to sort out their differences by bipartite but did not bring significant progress in the process of negotiation. What complicated the situation more is the multifaceted nature of the management in which decision was made either directly from managers of the company at the site or from CEOs residing in different country in the other company's projects. In fact, the CEO is located in Cyprus. Meanwhile the regional BOLSA obliged to intervene in the matter for the sake of keeping the industrial peace and pursuance of the development activity without hindrance. 4. What was the problem in the beginning? The main problem in fact, in most cases there is non-compliance of the labour law in both parties but attitudinal conflict related to work culture outweigh throughout the project life. Almost one third of the work force of the company are expatriates from Pakistan, India, Cyprus and Greece origin who are selected not basically on merit basis but likely loyal attachment that they have with the top management. It is commonly known that expatriates are required for their technical expertise and special knowledge transfer advantage but in Dragados most of them are assigned on nonspecialized positions even sometimes were seen taking over routine jobs like; driving, fueling and workshop positions as a whole. This is the managements defending mechanisms from strained situation when confronted with the trade union. On the other hand, some of the trade union executive members behave most conservatively and rigid in their behavior. At some point they completely dislike the foreigners and defame them in sexual harassment. At another time they convince themselves better
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[LABOUR DISPUTE: A CASE STUDY IN THE CONSTRUCTION INDUSTRY] May 18, 2006 than those expatriates and nobody has better knowledge in road constriction than they do have. Therefore workers are mostly urging and strictly opposing the salary payment difference based on ethnicity. At the beginning, the management itself frequently seen to resist blindly the collective agreement not to come into effect and latter wards in the implementation phase, in fear of totally submitting its autonomy to those conservative members of the trade union that likely jeopardize the company's norm. Eventually, the relentless effort made by BOLSA realizes the collective agreement in the company. Issues like safety and health, transportation, camping facility are among the major ones which become source of dispute in Dragados that are relapsing frequently during the projects life. 5. Procedures /steps followed to reach a solution As described in the above discussion part, minor and regulated issues such as standards of the labour law exhaustively identified and appended to the collective agreement and the companys work rule within the framework of the labour proclamation itself. Where there is practices that are not comply with the statements of the collective agreement, with the help of experts (conciliators) from nearer zonal offices of BOLSA the two parties would try to compromise their difference through mediation as a first step to reach a solution. But in strained situation the regional experts (500 km away from the site) would take the responsibility and intervene in dealing with the cases through tedious processes. If things became beyond the capability of BOLSA, the federal MOLSA was requested to get into the matter as to bring the final resolution. According to our assessment, two third of the cases were dealt at company level through bipartite forum (management & trade union) and the rest one third case were forwarded to tribunal courts and tri-partite forum that is run mainly at zonal and regional level by experts of BOLSA and its compatriot; management and trade union representatives. For somewhat stringent cases the tripartite forum is carried out at federal level with the involvement of higher officials of MOLSA, ERA, EU delegates and consultant of the project. 6. The solution at the end

[LABOUR DISPUTE: A CASE STUDY IN THE CONSTRUCTION INDUSTRY] May 18, 2006 After thorough analysis of the challenges that encountered in such MNC that is taken as a sample, it came up with the idea of designing a better labor management system that would give a lasting win-win solution for the negotiating opponent parties. There is a need to smooth the relationship that exists especially between the management and the trade union that act proactively, and the parties should be supported in way of introducing efficient and friendly approach of resolving things whenever it emerges. Hence, we produced a draft document3 for tri-partite (adapted from the federal Advisory board) and bi-partite guideline. The former document didnt put into practice due to financial & technical constraints but the latter was dispatched for all major establishments and work accordingly. There is also another document to facilitate arbitration system of the Labour law, Article 143. The system is currently under trial in selected big manufacturing enterprises located in the region. More than three workshops have been launched to enrich all the documents with stakeholders especially in the presence of trade union members and management representatives. Even though Dragados has completed its mission in the region the guidelines will be used in other MNCs or any other establishment that supposed to be governed by the labour law. One of the major shortcomings of the system is it doesnt serve for the majority of micro and small enterprises with a small size of manpower and where there is no established trade unions. 7. Conclusions What the lessons learnt from the above experience is that managing the labour disputes in the construction sector where the work situation is fully dependant on the projects life, and existence of cultural differences, efforts should be made rigorously to harmonize the industrial peace through bi-partite and tri-partite mechanisms and there is no doubt that the system works as efficient as used to be. It is definitely a good approach; indeed it will not only recommend repeating this in future but also advocating on it. And every member of trade Union and most management groups are eager to make use and test in their establishments. The lesson that learnt from the experience is sometimes being challenged by a stiff situation is not simply a bad luck,
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The document is prepared in local language, Amharic

[LABOUR DISPUTE: A CASE STUDY IN THE CONSTRUCTION INDUSTRY] May 18, 2006 but would be a great opportunity to get what you dont have in hand.